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Overview: What are the government’s intended changes in terms of employees and employers?

We can help you prepare for the changes brought about by the Labour Code amendment, the government’s consolidation package, the Whistleblower Protection Act, and the Employment Act amendment. Below, you will find an overview of the most significant topics of the coming months.

What to expect?

LABOUR CODE AMENDMENT

The amendment to the Labour Code will bring a number of major changes that will affect all employers, regardless of the sector or area in which they operate. These changes encompass rules regarding working from home, agreements on work outside the employment relationship, informing employees and delivering documents.

EMPLOYEE BENEFITS AND GOVERNMENT CONSOLIDATION PACKAGE

A key plan for economic stabilisation and reduction of the public deficit has been introduced, known as the government’s “Czech Republic in Shape” consolidation package. Among the elements discussed is a change in the tax regime for employee benefits. What are the introduced changes to employee benefits and how to prepare for them? Our legal, tax and HR experts have prepared comprehensive advice on getting ready for the new taxation of employee benefits.

WHISTLEBLOWER PROTECTION ACT

The new law, effective from August 2023, emphasises transparency and ethics in the corporate world. Employers with over 50 employees along with other entities must establish an internal whistleblowing system to report violations. Reports can include criminal offences, misdemeanours, and breaches of EU law. The law also sets out penalties for non-compliance and specific rules for obliged entities.

EMPLOYMENT ACT

The forthcoming amendment should particularly affect employment agencies and employment intermediation, not only by modifying the obligations of employment agencies, but also the protection of agency workers.

Labour Code Amendment Highlights:

  • Mandatory working time scheduling.
  • The possibility for an employee to request employment in an employment relationship (after working a certain period of time under one of the agreements) and the obligation for the employer to justify in writing any refusal.
  • Employer´s obligation to provide written justification for termination of the agreement at the employee´s request.
  • Application of the leave provisions in a similar way to the employment relationship.
  • Mandatory written agreement with the employee.
  • Option to terminate the working from home agreement for any or no reason with 15 days’ notice.
  • Obligation for the employer to give written reasons if it refuses to allow working from home for certain categories of employees (in particular employees caring for children).
  • Relaxation of rules for electronic signing and delivery ‒ a simple electronic signature and delivery of documents to the employee’s private e-mail address is sufficient for signing the employment contract and its amendments as well as agreements on termination of employment.
  • The right of an employee to withdraw from an employment contract concluded electronically within 7 days of its delivery to a private e-mail address.
  • Setting stricter rules for delivery and requiring a higher level of electronic signature solely for unilateral termination documents, removal from a managerial position, resignation from a managerial position and salary agreements.
  • Dropping the requirement for a recognised electronic signature by the employee, with a recognised electronic signature required on the employer’s side only.
  • Significant reduction of the deadline by which the employer is obliged to comply with the information obligation to 7 days, or, in the event of a data change, no later than on the same day.
  • Extension of the range of data that must be provided to the employee.
  • The possibility to inform electronically.
  • Introduction of an extensive obligation to inform employees of the conditions of posting abroad.

Highlights from the Whistleblower Protection Act:

  • The introduction of an internal notification system through which whistleblowers can submit written (and oral) reports.
  • Designation of a competent decision-maker who, in particular, assesses the validity of the report, communicates with the whistleblowers and proposes remedial measures to the obliged entity.
  • Protecting whistleblowers from retaliation, in particular from direct and indirect actions/reprimands triggered by internal or external reports that may cause undue harm to the whistleblower.
  • Recording and retention of reports for at least 5 years.

Impact of the government’s consolidation package on employee benefits:

  • Exempt benefits provided e.g. in the form of cafeteria or leisure cards are being capped.
  • The exemption limit must now involve all supporting benefits, including:

     - reconciliation of family and working life (childcare allowance),

     - employee health care (above-standard health care),

     - spending time together (family trips to the zoo, IQ parks, family and sports days for parents and their children, etc.).
  • The change will also significantly affect teambuilding, which is popular with the upcoming generation. The costs of these activities will now need to be allocated to specific employees and counted towards the exemption limit. If the limit is exceeded, the amount will have to be taxed (and reinsured). In practice, this may lead to a significant increase in staff costs, as many employers encourage teambuilding in particular, as it leads to a significant improvement in workplace relations and increased work efficiency. The change may also have unpleasant financial implications for the employees themselves.
  • The value of meals, regardless of their form, will be limited to a maximum of 70% of the meal allowance for a 5-12 hour working trip. The value of meals above this limit will be subject to taxation and insurance premiums. Refreshments at meetings should remain unaffected by these changes.
  • The amount not subject to taxation on the part of the employee is significantly reduced in the case of so-calledsocial assistance provided by the employerin direct connection with overcoming extraordinarily difficult circumstances of the employee as a result of a natural disaster, ecological or industrial accident in areas where a state of emergency has been declared (proposed reduction from CZK 500,000 to CZK 50,000).
  • Interest-free loans up to CZK 300,000 remain exempt.

Time Schedule

What to expect?    

Effectiveness of the Labour Code Amendment 

Expected to take effect from 1 October 2023 (to be updated from time to time).

What can we expect from January 2024?

From 1 January 2024, an amendment to the Labour Code will come into force in the area of leave for employees working on the basis of agreements for work outside the employment relationship.
 
Consolidation Package 

Expected from 1 January 2024.

Whistleblowing

1 August 2023: obligation to introduce a whistleblowing system for employers with over 250 employees.

15 December 2023: obligation to introduce a whistleblowing system for employers with between 50 and 250 employees.

How can we help you prepare for the planned changes?

Overview of our Services: 

  • Individual consultation.
  • Workshop for your HR team.
  • Analysis of what changes will affect your company and suggestion of how to address these changes.
  • Preparation of internal legal documents. 
  • Technology tools to simplify legal requirements.
  • PeoplePort ‒ a unique tool for the electronic signing of HR documents.

 

We are here to help you. Fill out the non-binding form, tell us what matters interest you and we will get back to you within 2 days.

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